Types of Organizations: PMP Exam Preparation

Every company has two organizational structures: The formal one is written on the charts; the other is the everyday relationship of the men and women in the organization. - Harold S Geneen

The success of any project depends on factors such as the skill level of project managers , motivated teams and supporting sponsors . However , it also depends upon factors such as the project context or the organizational environment where the project is carried out . A large part of the project context is determined by the organizational structure , which PMI refers to as the type of the organization . The organizational structure influences factors such as who the project manager goes to help with resources , how communication must be handled , and many other aspects of project management .

The PMP practice exam has several questions where a project description or a situation is given ; and it requires us to identify the type of organization that is involved . This also has other questions on the topic such as who has the power in each type of organization , what are the advantages and disadvantages in each type of organization .

In this article , therefore , we will take a look at some essential information regarding these three types of organizations .

Types of Organization :

Functional :

Description : This type of organization is grouped by different areas of specialization within different functional areas such as accounting , marketing , purchase , etc . Projects in these type of organizations are usually taken up in a single department and the team members may be loaned to these projects from time to time . Team members are expected to take up departmental work in addition to their project work . Each department in a functional organization will do its project work independently of other departments . If any information is needed from another department , request is sent by the head of the department which is implementing the project to the head of the department from whom the information is needed .

Who is in charge ? In a functional organization the functional or departmental manager is in charge . The project budget is usually managed by the functional manager . The project manager has low influence or power or he could even be a part time employee .

Advantages : Some of the advantages of a functional type of organization are

Well defined career paths for the team members in their areas of specialization .

Deeper company expertise by function .

Team members usually report to one single supervisor .

Similar resources are centralized as the company is grouped by specialties .

Disadvantages : Some of the disadvantages of a functional type of organization are

The project manager has very little or no authority .

Functional organizations lack career paths in project management .

Priority on the projects are lower and people place more emphasis on their functional speciality to the detriment of their project .

Resources are usually not dedicated to the project .

Projectized :

Description : In a projectized organization , the entire company is structured according to projects instead of functional departments . Team members are often collocated and most of the company's resources are allocated to project work . In these types of organizations , the project manager is highly empowered . These are mostly found in consulting environments . People are assigned and report to a project manager . Once the projects are over , the team members are assigned to another project or they need to find work with a different employer . All the communication occurs within the project .

Who is in charge ? In a projectized environment , the project manager has the highest level of control .

Advantages : Some of the advantages of a projectized organization are :

In a projectized organization , the project manager has complete authority .

Loyalty is strong , to both the team and the project .

Since everyone is on a single team , project communications are easier and they are more efficient in comparison to functional organizations .

Disadvantages : Some of the disadvantages of a projectized organization are :

Project 'team members ' work themselves out of a job and may have no 'home' when the project is completed .

Professional growth could be difficult in a projectized organization .

In a projectized organization , team members only belong to a project - not to a functional area .

Matrix :

Description : In a matrix type of an organization , individuals report to both the functional manager for human resources and a project manager for projects . Team members are required to perform project work in addition to departmental work . Matrix organizations are classified as weak , balanced and strong depending upon the relative level of power and influence between functional managers and project managers .

Weak Matrix In a weak matrix , the functional manager has more authority . In such a type of organization , the project managers role is more of a project expeditor or a project coordinator . The project expeditor acts primarily as a staff assistant and communications coordinator . The expeditor cannot personally make or enforce decisions . The project coordinator is similar to the project expeditor except that the project expeditor has some power to make decisions and reports to a higher level manager .

Balanced Matrix In a balanced matrix , power is shared evenly between functional and project managers .

Strong Matrix In a strong matrix , power rests with the project manager .

Who is in charge ? In a matrix organization , the power is shared between project managers and functional managers .

Advantages : Some of the advantages of a matrix type of an organization are :

In Matrix type of organizations , project managers could gain deep expertise of a functional organization , while still being empowered to manage the resources on a project .

In a Matrix type of organizations , you could have maximum utilization of scarce resources .

Disadvantages : Some of the disadvantages of a matrix type of organization are :

Since team members in matrix type of organizations have two bosses , it could sometimes cause conflicts and confusion .

In these types of organizations , overheads could be more due to duplication of many tasks .

Projects in these type of organizations are tougher to monitor and control .

Conclusion : One of the factors that could influence the success of any project is the type of the organization where the project is carried out. In the PMP exam, there are several questions which are based on the topic. Therefore aspirants of PMP course must develop a concrete understanding of the topic while preparing for the exam.

About the Author

Sabyasachi has over a decade’s experience in leading IT and non IT projects in the Healthcare, Oil and Energy, eCommerce , Public Sector Undertaking , and Services industry . He is a PMI certified Project Management Professional , PMP, and a volunteer in the Project management community with a focus on best practice and mentoring other project management professionals . His writings are regularly published in several blogs , forums and online project management communities .